Your Questions About Reverse Mortgage

William asks…

How does a reverse mortgage affect medicaid qualification?

My 66 year old mother is considering a reverse mortgage, but even with that supplemental income potential, she will still need to apply for Medicaid to cover prescription expenses. Will a reverse mortgage affect her qualification for Medicaid?

admin answers:

Factoid:
Most people move out of their home at age 82 with a reverse mortgage.
If she is typical she will have nothing to her name when she sells the home.
To me – reverse mortgages are a scam that needs regulation by the federal goverment.
Reverse mortgages are robbing the trusting and elderly.
Just like ARM loans did.
Sell the house – get the cash out – buy a small condo or rent.
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Richard asks…

Reverse mortgage, what are the payback options and how is the money accessed and distributed?

The reverse mortgage will be for my mother who is unable to manager her funds. How can I protect her funds and administer her monies safely? Is it possible to put restrictions on where and how much money is used?

admin answers:

Payback option – pay it off at death or permanent move. If you can pay it back earlier, you don’t need a reverse mortgage. You need to form a trust with the proceeds of the reverse mortgage. The trust can say virtually anything your mother wants to say about how to administer and what restrictions. A trust attorney can do this relatively easily.

Sandy asks…

My deceased father has a reverse mortgage – the amount owed is less than the value of the property?

I would like to take out a mortgage to repay reverse mortgage. Do I have to take out mortgage for value property or just what’s owed on the reverse mortgage? I’m 1 of 3 heirs and we are to divide the assets equally. But the only asset is the house. So my question is do I need to take out a loan for value of house so heir can get their 3rd?

admin answers:

You would need to pay off all liens on the property, before you can transfer it into your names. A mortgage is a lien. So in order for all heirs to be able to get their third, the house would have to be mortgaged for the amount of the lien(s), and then be sold which usually has fees associated with the sale.

Or, the executor could simply sell the property to one of the heirs or someone else and the equity could be split amongst the heirs at the closing table.

Ruth asks…

What happens to a reverse mortgage after the person have to go to nursing home. How does that work?

What happens to a reverse mortgage after the person have to go to nursing home. How does that work?

admin answers:

Generally, the loan ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months (for example, to go into an assisted living home or due to physical or mental illness the borrower is not able to live in the property on which the loan has been taken. At that point, the reverse mortgage can be paid off with the proceeds of the sale of the house, or if the borrower has died, the property can be refinanced by the heirs of the homeowner’s estate with a regular mortgage. If the proceeds exceed the loan amount including compounded interest and fees, the owner of the house receives the difference. If the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank (or insurance which the bank has on the loan) absorbs the difference. So, in your scenario, it would depend on the loan conditions.

Laura asks…

Can someone get a reverse mortgage if they already have a mortgage on their house?

If my house is worth $250,000 and I have a first and second mortgage that adds up to about $135,000 can I still qualify for a reverse mortgage? Does it depend on how much equity I have in the house or liens on the property?

admin answers:

Yes but you have to be 62 or older.

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